Apple's reputation hit by poor iPhone sales, child labour

iPhone 5
iPhone 5

THE iPhone is no longer the "It" phone.

Apple last week stunned markets when it announced lower than expected sales, the bad news sending share prices crashing.

Its problems were compounded this weekend when it confirmed reports that its suppliers had used illegal child labour to make its products.

The admission has encouraged critics who accuse the company of profiteering.

The iPhone has an estimated profit margin of 55 per cent, helping to make Apple one of the world's most valuable listed companies.

But iPhone sales were worse than predicted over the Christmas quarter, with 47.8 million iPhones sold, two million short of a forecast 50 million.

An internal audit uncovered 106 "active cases" of children being employed by its suppliers over the course of 2012, and 70 people who had been underage and had either left, or passed the age of 16 by the time of checking.

Of those 106 under-16s, 74 were employed by a single Chinese manufacturer of circuit-board components used in Apple products.

Apple said a local labour agency "knowingly" supplied the children and responded by terminating its relationship with the supplier, and reporting the labour agency to authorities which fined it and suspended its licence.

"Our approach to underage labour is clear: We don't tolerate it, and we're working to eradicate it from our industry," Apple wrote in its report.

"When we discover suppliers with underage workers or find out about historical cases ... we demand immediate corrective action."

The news followed the high-profile protest by Chinese workers at Foxconn, the world's largest electronics manufacturer, which supplies Apple and others.

About 150 workers threatened to commit suicide by leaping from their factory roof in protest at their working conditions but were coaxed down after two days by Foxconn managers and local Chinese Communist party officials.

The setbacks have added more pressure on chief executive Tim Cook.

Apple's stock reached a peak of $705.07 in September last year,but last week fell below $500.

During a conference call with investors last week, Cook played down reports Apple had reduced iPhone orders, insisting the company "is in one of the most prolific periods of innovation in its history".

He said: "We rely on the same spirit and drive that brought the Mac and other revolutionary products like the iPod, iPhone and the iPad into the world."

But analysts say consumers are shifting away from the iPhone's 3.5-inch and 4-inch screens toward the 5-inch screens offered by companies such as Samsung, which saw its profits in the last quarter of 2012 surge 76 per cent, helped by sales of its Galaxy smartphones.

Tellingly, demand has also been high for the Apple's earlier and cheaper smartphone models.

Topics:  apple iphone

Woolies announces closure of Ipswich store

Woolworths in the Ipswich Mall.Photo: Rob Williams / The Queensland Times

The last day of trading will be January 1

Energy drink DNA linked man to crime, court heard

DNA EVIDENCE: An Ipswich man was sentenced after he left an energy drink can at the scene of his crime.

27-year-old charged after police find his DNA at crime scene

Tax time has just about run its race

Here are four tips for last minute tax lodgers

Local Partners

Workmates honour crash victim with tribute

UPDATE: Tanya Lyell is being remembered as a young mother dedicated to her family and work as the town she called home mourns its loss.

This week's community billboard

Learn woodworking and crafting with the Ipswich Woodcrafts Club.

A daily guide to what's on in Ipswich over the next seven days

Community garden set for Palmwoods

Kay Nixon at the Palmwoods Community Gardens will be hosting a launch day and inviting the ecommunity to come along and sign up.

Parcel of land to supply sustainable gardening for community

Things to do this week

Dragon play Ipswich Civic Centre on Friday October 28

What's on in Ipswich

Steve Irwin's final days through dad's eyes

Bob Irwin with his son Steve.

'You never expect that’s the last time you’re going to see your son'

Kristie doesn't mind being the third wheel in Survivor final

Kristie Bennett in a scene from Australian Survivor.

SOLO player will take on Survivor's power couple Lee and El tonight.

Scary hoping Posh and Sporty will re-join The Spice Girls

Mel B

Mel B hoping Victoria Beckham, Mel C will re-join The Spice Girls

REVIEW: Michael McIntyre has Brisbane in stitches

Michael McIntyre in a scene from his TV series Michael McIntyre's Comedy Roadshow.

BRITISH comedian is in the country on his Happy and Glorious Tour.

Cliff Richard doesn't need Rod Stewart's help with legal bills

Sir Cliff Richard

"'Don't worry, I'm loaded. I won't keep you to it.' "

Woolies announces closure of Ipswich store

Woolworths in the Ipswich Mall.Photo: Rob Williams / The Queensland Times

The last day of trading will be January 1

Look at me! Kath and Kim home up for sale

Kath and Kim from the iconic Aussie TV series.

'Crack open the Baileys and grab a box of BBQ Shapes'

How to fit 100,000 new homes on the Coast

Property, real estate, housing, suburb,  August 2016

Fitting 2m extra people in south-east Qld in 25 years a balance

Hinterland horse stud passed in for $8.25 million

UNREAL: This Maleny estate is incredible.

12-bedroom hinterland horse stud still available

Hit songwriter's Noosa mansion on market

SPECIAL PLACE: The Cintamani estate is going to tender, marketed by Tom Offermann Real Estate.

Is this Queensland's best property?

Kiwi siblings snap up Dotcom mansion for $32.5m

The new toy company owners of the Coatesville mansion want replace any controversy with positivity and fun. Photo / Barfoot and Thompson

The trio paid $32.5 million for the property in June